Cold, Shutdown Affects January sales

It is expected that the new sales of light vehicles in the USA will change little in January from the beginning of 2018, although the record of cold sweep across the Midwest during the important stretch of the month closure makes the decline more likely.

And while the prolonged government shutdown that affected business at dealerships near Washington has ended, the temporary nature of the resolution is unlikely to make federal employees feel like buying.

A prognosis of J.D. Power and LMC Automotive require sales to decrease by 1 percent and an annualized and seasonally adjusted sales rate of 16.8 million, the lowest since August. Cox Automotive projects a volume increase of 0.2 percent, or less than 2,000 vehicles. Edmunds says sales will increase 1.3 percent, but his forecast was issued last week, before the magnitude of the cold weather became clear. (On Wednesday morning, at O’Hare International Airport in Chicago, the temperature was 22 degrees below zero with a wind chill factor of minus 49).

“January sales are expected to slow as buyers retire from the market and the holiday shopping season,” Charlie Chesbrough, senior economist at Cox Automotive, said in a statement. “Normally we see a drop in sales in January compared to December, and that will be this year’s story as well.The closure of the government that dominated the news and some negative economic indicators probably led consumers to be more conservative as the Uncertainty The cold record forecast for this last week of the month will not help either. ”

J.D. Power said retail sales in the first half of the month fell 3.8 percent nationwide, and 6.2 percent in the north-central United States as a result of a snowstorm.

Automakers are scheduled to report their January sales on Friday. Generally, January is the month with the lowest volume of the year, which means that small variations in volume can disproportionately affect SAAR.

Most analysts forecast a drop in sales for the industry in 2019, after a small gain last year that was linked to tax reform and increased fleet deliveries. But they generally wait until at least the spring sales season to begin to assess how those projections are developing. The government’s shutdown, which was halted after 35 days on January 25, adds to the difficulty of forecasting sales this year, and February’s results could also be affected if Congress and President Donald Trump can not get there. to an agreement before the February 15 deadline. .

“January is a month of sales so slow that it does not have much weight when it comes to predicting the health of the automotive market for the whole year,” Jeremy Acevedo, industry analysis manager at Edmunds, said in a statement.

Sales volumes may be flat, but the final results continue to point in a positive direction for most automakers. The industry’s average transaction price is in pace for a January record of $ 33,285, up 3 percent from a year ago, said J.D. Power At the same time, he said incentives dropped 3.5 percent to $ 3,720 per vehicle.

“The sky is not falling but, coming out of a solid 2018, the auto industry faces headwinds that are likely to reduce demand this year and by 2020,” said Jeff Schuster, president of American operations and global vehicle forecasts for LMC. . a declaration. “The key to see is production. If the manufacturers produce an excess of production, the levels of inventory will increase and that can increase the incentives. The industry has to be careful. ”

Cox and Edmunds forecasts show that FCA US, Subaru, American Honda and Hyundai-Kia gained market share in January. They project a lower share for General Motors, Toyota Motor North America and Nissan Group.

The predictions for Ford Motor Co. and Volkswagen are varied. Edmunds predicts a 12 percent increase in Ford sales, while Cox sees Ford registering a 3.4 percent decline. The combined sales of VW-Audi decrease by 8 percent in Edmunds, but increase by 4.4 percent in Cox, which includes Porsche with VW and Audi.